Dubai crisis - Follow up

someone said to me, "it's sheer 59 billion. is this really that deadly?"

yes, 59 billion is no big deal. the most important is not the absolute value, but the chain reaction and the momentum it can build.

first, those banks, those lenders, they may well have hedged their loans by mitigating to other investors. this is basically the same mechanism as we have seen in the meltdown of subprime loans. like the real estate, we need to estimate the whole chain to see what the burst of the bubble would bring. how big is it? i don't know.

one step further. this may cause a new round of panic. the cost of lending would rocket and the just built-up inventory would be stuck again. for many businesses, this is a critical time since they are about to get refinancing of previous loans. what they might say to themselves is, "oh, no, not right now." if this kind of mood spreads, this is the catalyst elliot wave theorists are waiting.